Welcome 2011

Once More Let Us Raise Our Arms Skywards & Welcome the Billion New Hopes in Our Lives! Wish You Grand Gorgeous New Year 2011 

Product Ideas for Success

All marketers know that a great marketing strategy has to have a highly differentiated product at its core. But most products have tend to look & feel the same leading to confusion in the mind of the customer. Well you would say that there are limits to incorporating the functional or augmented differentiations built into the offer.

Packaging comes very handy but do not go far to the second moment of truth for the customer experience. Shapes, sizes,  pricing, distribution points etc could crate sustainable differentiation too. Its possible to create a core product for each category and then go on augmenting it to the fully loaded version. Lets take a case of newspaper.

A daily newspaper carries sections like politics, technology, business, sports etc bundled together into one whole inflexible offer, What if you need only tech & sports sections only? Noo, you can't have them? Why not? Its time we have newspaper who show greater respect to readers and provide news strictly as per requirement. Days are over of the pontificating editors telling how to tie our shoe laces or address a political boss. The new democratic global order warrants that the customers be respected for any success in the marketplace. Hope we shall have such customized papers soon in the market and like we choose our news, entertainment or sports channels we could also have the freedom to select the newspaper portions too.  

New Year Resolution for 2011

Honestly let me admit that i am not very fond of new year resolutions, as i do not feel that new year begins necessarily on 1st Jan for everyone on Earth. A true new year would be when we make a new beginning of sorts in life. If we continue with our past routine in the new year too then whats new about the new? Therefore we must strive to initiate something new in our respective lives to make them more meaningful & worthy. My best friend has already left me in 2010 for a better future without me so i can learn my lessons from there and move on with my new life in 2011. Thank you friend!

A New Year resolution must not be along the trodden insipid lines like a desire to buy a new dress or eating out at a fancy restaurant or buying a new car, that would be what i call ordinary. Okay let me list few new year resolutions here so that other could add to the list:

1.Wear your trousers that you acquired in 2008, lose enough weight.
2. Run 10 kms without stopping.
3. Travel to some new place alone for a week
4. Resolve to hear no one for a week
5. Avoid bad friends for one year
6. Work 24x7 for one month least
7. Help a friend in need with money
8. Seek no help from anyone for one year
9.Walk alone for 100 kms without a break
10.Eat same food 3 times a day for one month
11. Forget that friend who left  you shaken & hurt
12. Be genuine for a year, avoid all classical smartness
13. Break free from at least one social norm
14. Fall in love with life again
15. Tell your teacher you don't understand the lessons in the class at all
16. Shout out loud at a public place

I invite suggestions to expand the list

Case Study for MBA- Marketing Management: Leopard Bath Fittings

Some twenty years ago a group of professional with diverse backgrounds working in different companies in Bath & Kitchen fittings industry segment decided to set up a venture. There were number of small units in the area around Chandigarh engaged in manufacturing taps and showers. They would sell their products to the local traders at a wafer thin margin and would also do job work for the leading players in the trade.  So some professionals and few small manufacturers decided to come together and project their newly acquired critical mass into the market.  Consequently a new company by the name of Leopard Aqua was born.

Leopard Company was thus a mainly marketing company with a minimal production capacity. Its corporate office was set up in a 5 canals plot in the industrial area at Chandigarh.  Besides serving as HQs it had a well appointed showroom for selling the products from the premises.  The company was jointly owned by the eight directors having equal number of shares. However their responsibilities were defined but some overlaps remained as more than one director were engaged in the same function. One of the directors was appointed as the Managing director and other assumed responsibilities of accounts & finance, production and other important tasks. In fact three directors choose to be sleeping partners leaving the management to the remaining five. After 6-7 years two directors left the company but the management remained unchanged. It has been incorporated as a closely held limited company.

In the FY 2006-2007 the Leopard Company had a gross turnover of over INR 200 Million (Annexure 1). The company produced several lines of bath & kitchen fittings from low to high price/quality segment at different plants owned by different directors. It is usual for revenue based target driven sales force to push the fast moving low price products in the market. Such products by their nature have very thin margins.  This would result in low sales of quality high end products having good margins.  The Leopard sales team despite repeated reminders kept pushing the low price middle quality products into the market without giving a significant push to the high quality good margin items. Therefore there developed an imbalance in the market.  

The sales team that joined Leopard 20 years ago remained with the company as the growth in sales resulted in consequent growth in their commission earned. Subsequently the company started hiring sales people on salary basis as they needed to employ MBAs and other professionally qualified people. Like many other SMEs in India the top level sales team at Leopard remained less educationally qualified as compared to the new recruitments.  It was felt that people who worked on commission basis would stop pushing the sales once they had attained their personal financial goals. 

A company is known more by the quality of its products than by the tall claims in its advertisements and promotion messages. Hence despite having top quality products in its portfolio the Leopard Company suffered from the lack of proper positioning of the brand. Till late 90s such companies did not take to mass media advertising seriously and kept to Word of Mouth promotion only.   There was a general thinking in the industry that since end user buys taps (faucet) & shower only once or twice in a lifetime therefore it would be a waste to convince them through mass media.   Moreover consumers largely depend on the advice of architects and masons in purchase of such products.

The Leopard Company kept a reasonable amount as promotion budget every year since its inception following the all you can afford approach.  But even then it did spend 2-3 percent of its turnover yoy since first year. The company engaged a marketing expert and repositioned the brand from rational to emotional appeal with a shade of Indian nationalism. It was felt that rational appeal does not seem to lead to any unique positioning as most brands in that domain had similar appeal to the customers. Moreover since most of the sales came from domestic market it was proper to appeal to the local sentiments.

The Leopard Company has a national direct sales force of 30 people working at various levels reporting to the MD and other indirect sales force of 20 feet on street people. It has national distribution network across India comprising 250 dealers. The company has robust sales and marketing systems. There is no significant amount of credit outstanding as the goods are cleared through bank only. The leopard’s inflexibility in extending accredit to trade buyers speaks volumes for its brand loyalty and product quality.  It has achieved leadership position in Gujrat and has significant market share in remaining southern states, it does not enjoy significant market share in the north India where its head office is located.

The Directors in the company have reached their middle ages and their children have taken different career paths. Till recently no director asked the board to appoint his child in the company. In the year 2007 one director got his appointed in the company against the wishes of the majority.  And also some directors also have lost the enthusiasm to keep working with the same energy.  The situation has been complicated by two directors complaining that products manufactured at their plants are not being sold in good numbers leaving them mired in problems regarding working capital management and high inventories.  Though Leopard can raise capital from debt or equity route but there is no mechanism to route it to the independently incorporated pvt limited company owned by the indebted directors. As those organizations has already been leveraged. 

The recent entry of international players like Kohler, Roca and American Standard has increased the competition in the market at the high end. The lower stratum of the market has been invaded by numerous small players as the technology barriers are too low. Most companies in India in bath & kitchen fittings segment use very basic technology in the casting and mould making. Therefore there are no significant entry barriers for new players to make inroads into the market. The new players having lean infrastructure have the capacity to compete on very thin margins can drive out an established product from the middle to low segment.

Due to multiplicity of challenges the Leopard Company has decided to look for alternatives such as partial or complete divestment of equity.  In your opinion should the company go for full divestment mode in 2011? What would be a reasonable price to ask for such company in case of full divestment? What would be the brand value of its Leopard brand?

Myth & Realty of CRM in India

A corporation must strategize its engagements plan with the customer in order to have a healthy top line over longer period. A corporation must attempt to create an engaging dialogue with target consumers and stimulate their engagement with the brand.

Reams of literature exist that stresses the need for focusing on the Consumer engagement & Delight in order to have financial profit from the enterprise. But what is the reality of the real market in India? How many consumer durables companies have a customer complaint/feedback button on their website? In the FMCG domain the scenario is no different. The E2E or B2B markets have different mechanisms to deal with negative feedback. No durable or FMCG company in India has a formulated Customer Grievance policy that could be set in motion in case of negative feedback & assist the executive to remedy the hurt/loss. What does it mean? All that ‘marketing talk’ on customer comes first are mere sham or myth? Check any company budget templates and try search the allocation &appropriation for complain redress?  Where is the marketing in India?

Another important misunderstanding about marketing in Indian context is about the relationship between Consumer engagement & consumer satisfaction. As per wiki,” Customer engagement has been discussed widely online; hundreds of pages have been written, published, read and commented upon. Numerous high-profile conferences, seminars and roundtables have either had CE as a primary theme or included papers on the topic. Customer engagement marketing places conversions into a longer term, more strategic context and is premised on the understanding that a simple focus on maximizing conversions can, in some circumstances, decrease the likelihood of repeat conversions (Customer engagement interview with Richard Sedley). CE aims at long-term engagement, encouraging customer loyalty and advocacy through word-of-mouth.”

Customer Engagement in services is more critical than in the products because of the nature & ownership issues. Most Marketing managers focus more on satisfying the customers at the primary product level without strategizing the process of engagements. In a scenario of less importance to marketing in the deficit markets of India/ China nature most companies are confused in allocation of resources between Engagements & Satisfaction. Such a situation would mean the once you have a strategically great product, price & promotion you need not factor in the issues of engagements.

I have researched the problems with my client organizations and the market at large. The service companies must have a defined engagements policy that could maintain the consumer trust resulting in financial success for the corporation. Some of my recommendations are:

1.    Engaging consumer in pre, sale & post sale needs strategic stance.

2.    A satisfied customer can forget you so needs reminder

3.    A bad situation can be converted into a gain with the help of quality engagement.

4.    An engaged customer has more value than the satisfied only.

5.    Quantity & quality of the communication must be calibrated with a bias for quantity in deficit markets like India. 

Gurinder S. Ahluwalia

http://anahadmc.blogspot.com/

Online Free Marketing Management Lessons for MBA/PGDM India

Some of my students have been asking me to use the social media for study of Marketing Management for MBA students in India. Well let us begin today! But i would not not be posting any lessons unless asked particularly & also would write in brief only. But it goes without saying that you could ask me anything under the Sun on Marketing Management in India...and you would get an answer to the best of my abilities.

What would you gain from this interaction? Firstly, how many of your MM faculty has industry experience? Secondly how many of them share industry data in the class room? Do they ever go beyond Philip Kotler, wonder if most even understand that standard text book? Moreover how many are tech friendly? and have a blog? Enough said about they way i handle Marketing Management.

Firstly let me clarify that i do not agree with the general trend they way MBA students opt for specialization in Marketing Management in MBA course. You would agree that it has become a practice that students with higher grades go for Finance major whereas less bright go for Marketing. Marketing management has become the favorite course of the wimp, and thats the problem. In fact  Marketing management graduate need to know finance as well otherwise s/he would not be able to make profitable marketing moves.

How to select a proper specialization is a million dollar question for the students in the mid course. And the job is not over once you have opted for Marketing Management. Because you need to learn to appreciate that the application of Marketing would vary depending upon the product/service you wish to market. B2B marketing is whole lot different than B2C. Theory of Marketing Management may remain almost same but their would be several finer points that a student must understand. Marketing in a growing economy like India may not have an actual customer relationship focus as you would see in the mature markets. Even the way the business activity may be organised on different lines. Therefore when you select Marketing major please take the next step of gravitating your studies around your select area of work/career. Once you have decided, and you must decide, to pursue a career in consumer durables, FMCG or B2B then focus on the working of corporations in that field only. Begin with the local market and go on to the global scene.

Philip Kotler texts are very basic that you would need to supplement with regular visits to industry websites, cases, discussions and workshops. Go for Marketing so that a we could have iconic Indian brands, and home grown fmcg companies with effective distribution networks.

Groupon Clones in India

It had to happen, anything that starts working somewhere else must be cloned and tried out in India too. It happened to organised retail, once wall mart topped Forbes list our smart business managers thought it would be easy to replicate it here, the blue collared IIM guys thought that with little deep pockets they could roll it out like a Bihar flood. No, i repeat, no retail company in India has been able to achieve there goals despite several corrections. The simple answer lies in the nature of indian consumer markets, we are not like the USA in any manner therefore how could the hope replicate an american business here?

Once again, whoever you meet these days at seminars and business dinners they would be raring to share there newest passion about groupon clone they have put together for India. Lets wait & see what happens to these indian groupons?

Indian consumer has demonstrated very clearly that except for convenience goods they are averse to buy any other stuff online. We indians buy slowly, very slowly and internet would take little more time to build up among the numbers comparable with the mobile phone. And i don't expect a guy who owns a 2G phone to buy online with mobile interface! How many subscribers have gone for 3G phones?

The most important bottleneck to the online buying through bidding is not the technology or the disposable rupee but the the prevalent trust deficit in India that has been the perpetual nemesis of the marketeers in India.

Online bid based buying would continue to be a like a multiplex film targeted at only 80 years old!  

HR policies in tune with Pareto principle

I often wonder why some corporate managers fail to recognize a mundane need for flexibility in organisation wide policies. Recently i worked with a first generation diversified corporate from Delhi  that faced such challenges. This company has presence in construction services industry and have forayed into higher education. Since India is growing economy for the past decade therefore many companies finding it difficult to keep pace with the rate of change. Some are so scared by rapid pace of change that they happen to do more damage in their unplanned  effort to control the flow of work. In there desire to put systems into place they end up choking the growth of the organisation.

The rant for having one kind of policy across the organisation may look pretty rational but it could seriously  stymie the growth. Let us examine a case. All organisations consists of people that have varied level of productivity. As per Pareto' law: its your 20 percent that matter more than the other 80 percent. Therefore its not false to argue that most companies have important 20 percent human resources that would be difficult to replace! So the HR need to have a plan that takes care of the challenge.

How many companies have solved the riddle of having flexible HR policies that could serve the need of both 20 & 80 percent pool?

Sales & marketing have figured a way out by implementing variable performance linked pay & growth path. This would mean that if you are a hard working, no-nonsense guy then you would take home more bucks at the end of the month. But is it enough? My experience at Indian Express Chandigarh, a decade ago  was different. Since the 20 percent guys were in minority the other 80 percentile ganged up against them and forced them out of the company, resulting in huge damage to the growth.

How to safe guard your 20 percent deliverers against 80 percent maintenance guys? If you are a professional who desire to keep your productive force together better have two-tier HR policies.One size does not fit all so its wise to have a two-tier system of management.

Catch them Fresh

Bomb disposal is child's play in India !

We have long been known as one of the most corrupt society on the face of Earth. We the Indians have been brought up listening to the stories of high & mighty politicians, bureaucrats & industrialists who lived happy lives post a sleazy run. Therefore the moral of the story, as we learnt from our parents, and have religiously passed on to our children, is that you got to emulate them to make a mark in the society. Don't be a paranoid crusader who lives by honesty & hard work, be practical and join the mainstream! Well some of my friends, & most Indians make money & lead happy lives following the mainstream path only.The fringe are always knowns as lunatics.

And once you have accumulated wealth by the mainstream means of India then the hands of the law are there to do your bidding. I too have many close encounters with morality and i too have not swayed away from our mainstream path many times, but on occasions when i decided to deviate from the well established path i always got deserved drubbing & lessons too. But still the rebel in me, like most Indians, does still take some liberties.

The recent scandals in India in the end of 2010 look like just gifts from Santa.Lets discuss them and enjoy the talks in media. And soon everything would be all right in the real mainstream way. Life has been like this India for the last more than 5000 years. Yesterday on the NDTV, a senior journalist Barkha Dutt was giving her side of the story in the famous Nira Radia episode. She was hurt for being singled out for condemnation, from a gang of 30 odd other journalists, by a less-circulated magazine whose editor pretends as if his marketing boss has not instructed him to carry the story for obvious gains. He firmly believes that he alone is responsible for this story of the decade. Hahaa. Well his journalistic ethics do not allow him so.

I do not wish to participate in this national debate, as i am convinced that we Indians have already known everything that needed to be discovered in this world, have noted that in our ancient books that are known to the many yogis living along Ganga river, therefore lets chill and or go watch some movie. After-all we have known since ages that bombs & bomb disposal is mere a child's play! Why i say this? My profound apologies for offending your feelings. I too am an Indian, no less patriotic than anyone else, probably i have given more to India than taken from it. Yes. I have always felt that i have given more to India than India had returned to me. I have given to India a tax paying, educated, law abiding & productive citizen but it has failed to give me freedom, justice and suitable work.

India must not try to debate about truth in public it could misfire and change its course in the the direction of truth & justice. If media does not stop talking about corruption in higher places then soon it would discover that its own ilk is no different than the rest. Its fashionable for the masses to blame the leaders when actually there can not be many corrupt leaders if the masses are not corrupt. We as a society gives God's status to money, no other society on earth has a god of money except us, therefore everything else like sacrifice, beauty, hard work comes second to pursuit of making money.

India must not bring discussions about corruption in society to the forefront, otherwise we must be forced to change our path away from pursuit of money, and that would be a catastrophe.